Wednesday, 14 September 2011

New data from Simply Business, the UK’s largest business and landlord insurance broker, suggests that tight budgets are hitting property maintenance by landlords, as the proportion of claims made for avoidable incidents such as leaks, burst pipes, frost damage and general wear and tear has increased by five per cent since 2008.

The data, taken from the claims of over 3,500 private landlords reveals that water damage is the biggest offender, with the number of claims increasing by 20 per cent since 2008. Water damage is also one of the most expensive problems to fix with the average cost of repair at £2,422 per incident.

Despite strong demand pushing rent rates to a record high*, the data suggests that increased overhead costs and fears about the ongoing stability of the UK financial market** mean landlords are scaling back on their short term costs and failing to proactively re-invest in the upkeep of their rental properties.

But with 3.4 million households now living in privately rented accommodation, it is essential that landlords foster good relationships with tenants and encourage them to report instances of damp or water leaks early as timely maintenance work can save on bigger pay outs later.

Landlords will be happy to hear that incidences of other claims have decreased, including accidental damage (down by 3 per cent), storm damage (down by 17 per cent) and theft (down by two per cent), although these are still amongst the most frequent problems.

Jason Stockwood, CEO, Simply Business, commented: “While insurance is crucial for landlords to ensure they can repair any unanticipated damage to the property, they must still maintain the property to a reasonable standard. Damage due to poor maintenance will not only disrupt current tenants and discourage future tenants but maintenance related claims are frequently not covered by insurance policies.

“With winter approaching, we would encourage landlords to check their properties are water tight and secure so they can withstand any heavy rain and cold spells. Otherwise they could be left with a hefty bill.”

Simply Business has released guidance for landlords on claims that are generally excluded from their insurance policies:

1. Frost damage as this is seen as a maintenance issue. A water tight building in good condition, should not allow water to get into the pipes or brick work, where it can then freeze, expand and cause damage over time. To avoid this happening, a regular maintenance programme should be implemented during the dry months.

2. Malicious damage by tenants is usually not covered on standard policies so landlords need to ensure they request this. Not to be confused with ‘Accidental Damage’, ‘Malicious Damage’ is the intentional physical damage to the property and would be considered a crime. Examples include vandalism, deliberate fire or theft of building fixtures. When claiming for this type of damage, the police need to be notified and a crime reference number must be submitted to the insurer or broker.

3. Un-occupancy: Most Insurance policies try to accommodate the common situation of a property sitting unoccupied between tenants, allowing 30 days before the insurance company needs to be notified of the change. Beyond the 30 days, some insurers may apply additional terms and restrictions until the new tenants move in, whilst others will not want the cover to continue at all. If the insurer is not notified that the property is unoccupied after the 30 days then it is considered a material change to the policy and any claim is unlikely to be covered.

4. Wear & Tear is the gradual deterioration of an object that takes place over time and is not classed as an insurable risk or event. It is the policyholders responsibility to maintain the condition of the property and keep it in a good state of repair.

5. Loss of Rent – If the landlord has agreed that the tenant shouldn’t pay rent because of damage to the property, but the property isn’t deemed uninhabitable then landlords cannot assume this will be covered. In order to claim for this the property must not be liveable for the tenants.